Pacific Life Re has assumed £10bn ($13bn) of longevity risk from pension schemes of Lloyds Banking Group.
The transaction, arranged with Lloyds Banking Group Pensions Trustees, is said to be the reinsurer’s second-largest UK longevity swap.
The £16bn deal between BT Pension Scheme and PICA, executed in 2014, is the first largest deal in this regard.
The latest deal offers coverage to Lloyds Bank Pension Scheme No 1, Lloyds Bank Pension Scheme No 2, and HBOS Final Salary Pension Scheme members.
The arrangement involved Scottish Widows served as the insurer.
The plan is aimed at protecting the pension schemes against the financial risk of an unexpected life expectancy increase and boosting their security.
Pacific Life Re head of longevity Andy McAleese said: “Pacific Life Re has been a long-term supporter of longevity risk transfer, having completed the first UK pension scheme longevity swap in 2009.
“There have been record volumes of pension risk transfer in 2019 and we are continuing to see very strong demand carrying over into 2020.
“This milestone arrangement demonstrates that longevity swaps continue to be an important risk transfer tool for pension schemes.”
Lloyds was advised by Willis Towers Watson on the transaction.
Willis Towers Watson head of transactions Ian Aley said: “This material transaction is further evidence of pensions schemes’ appetite to manage longevity risk.”